The US dollar has climbed for the duration of the trade week, and it appears that we are nearing a breakout. I’m paying great attention to the 152 yen level since it’s been such a hard ceiling. That being said, it appears that we are constructing a big ascending triangle, and I believe it is only a matter of time until we break through the resistance and reach much higher levels; the issue is, when will this happen?
We don’t really know, but clearly buyers are becoming more aggressive in the long run. The Bank of Japan raised rates to a pitiful tenth of a percent, and even though the Federal Reserve is likely to cut rates, you still get paid to hold onto this pair for the long term, which I believe is exactly what people will do. I have no interest in shorting this market, and I believe that any downturn will eventually turn into a good buying opportunity. If we can break over the 152 yen level, I believe we have a good chance of reaching the 155 yen level above.
Remember, while this pair has not been at these levels in years, it is hardly an all-time high. As a result, the US dollar may perform pretty well versus the Japanese yen at considerably higher rates. The Bank of Japan has boosted those rates, but it can’t do much more given Japan’s debt.